Lion's share for coal plants before the carbon tax bites

www.smh.com.au
March 31, 2012

Victoria's dirtiest coal-fired power plants have snared the lion's share of $1 billion in energy industry carbon tax compensation-a concession that will protect jobs but slow the shift to renewable energy. Yesterday's announcement came as outgoing Future Fund chairman David Murray slammed the carbon tax as the worst piece of economic reform he'd ever seen in Australia.

Latrobe Valley's brown coal stations Hazelwood, Yallourn, Loy Yang power station A and B, and Energy Brix are the major winners from the government's $1 billion Energy Security Fund, which compensates the most greenhouse-intensive power generators for the loss of value to their assets under the carbon tax, due to start on July 1.

The carbon tax aims to make such plants uneconomical in favour of cleaner power sources such as gas, solar, wind and geothermal energy. But Climate Change Minister Greg Combet said in a statement yesterday that the cash payments to nine power stations were needed to ''ensure secure energy supplies as the nation transforms to a low carbon future''.

Hazelwood power station, Yallourn W power station and Energy Brix are also applying for a separate pot of money under which the heaviest polluting stations will be paid to close down by 2020. Coalition climate action spokesman Greg Hunt said: ''They tax the power stations, then they give the heaviest polluting power stations in the country $1 billion to keep the lights on, and then they'll give them another $2 billion to turn the lights off. You couldn't dream up a sillier system.''

Environmental critics meanwhile say the compensation is too generous and will retard the transition to cleaner energy sources. ''It clearly reduces their incentive to cut their pollution,'' said Mark Wakeham from Environment Victoria. ''These are large amounts of money that could be used to insulate households against price rises through investments in energy efficiency.'' The Greens also opposed the compensation, with acting leader Christine Milne saying the party bid the government down from a larger pool of funds. Heavy-emitting power stations will also receive $4.5 billion in free carbon permits through to 2016-17.

Meanwhile, Mr Murray, who finishes as Future Fund chairman on Monday, delivered the government a blast on the carbon tax. ''It is the worst piece of economic reform I have ever seen in my life in Australia,'' he told ABC radio. Mr Murray has in the past questioned the science of man-made climate change, saying here was ''no correlation between warming and CO₂''. Treasurer Wayne Swan hit back at what he described as Mr Murray's ''well-known'' opposition to climate science. ''Big reforms like this are tough reforms,'' he told the ABC. ''They're never easy, and you will get vested interests and people like Mr Murray out there opposing them.''